LONDON — The European Bank for Reconstruction and Development says it may opt out of the Sakhalin-2 liquefied gas project in Russia now that OAO Gazprom is majority shareholder.
“No decision has been made to date (but) the new developments make things more difficult. They may make the bank less needed for the project,” a spokesman for the London-based EBRD said.
Royal Dutch Shell PLC said on Dec. 21 that Gazprom, the Russian state natural gas giant, would control 50 per cent, plus one, of shares in the Sakhalin-2 project, at a cost of $7.45-billion (U.S.).
The move makes Shell and Japanese trading houses Mitsui & Co Ltd. and Mitsubishi Corp. minority partners in the project based on an island off Russia’s far eastern coast.
With the new shareholding arrangement, Sakhalin-2 no longer seems to fit the category of projects usually financed by EBRD, which has since 1991 helped former Soviet bloc countries make the transition to market economies.
It normally finances new private companies rather than state-run projects, which Sakhalin-2 effectively becomes under Gazprom, which is controlled by Russia.
The EBRD had been in talks with Shell, Mitsui and Mitsubishi about providing a loan of $300-million to $400-million for the $20-billion project, but balked when environmentalists alleged damage to local flora and fauna. For EBRD, the new shareholding arrangement trumps the debate over the project’s environmental impact.
EBRD president Jean Lemierre said in October an investment decision could not be given amid uncertainty over the project’s status, noting “outstanding questions” need answering before further progress could be made.
Mr. Lemierre also said investments in Russia should not be reduced owing to concerns over the Sakhalin energy project. “The energy sector is a sector in which the Russian authorities have indicated that the state would like to have a more important role, but that does not apply to the rest of the economy,” he said.
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